A Complete Guide to Home Sharing & Your Homeowners Policy

The world of travel isn’t restricted to hotels anymore. People around the world are renting out their homes, or a room in their home, for those looking for an alternative to corporate lodging for short term residency. Whether it’s for extra income, or the pleasure of meeting world travelers, the fact is that more and more people are offering their homes to visitors who are seeking options for their vacation or business trips.

How does your homeowners policy cover home sharing?

Will your carrier pay a claim that arises from a traveler who starts a fire or causes water damage? Most Primary Homeowners’ Insurance policies will not allow a client to rent out their home on any basis, never mind on short term frequency. The policy is designed to protect the liability interests of the person(s) who reside in the home full time, their belongings, and the property itself, on the understanding that it is used as their main dwelling place.

Insurance carriers base their rates and coverage on the risks or perils that they face, and construct policies that can be used in a variety of circumstances, but usually do not allow for any situation to be covered. The policy language will have certain limits and exclusions that clients will need to be aware of when selecting the type of insurance plan that best fits their need. It is the job of the insurance agent to advise the client as to what type of policy that would best serve them.

The risks associated with short term rentals are more than the typical Primary Homeowners’ Policy would allow for; unless there is a specific endorsement available, most insurance companies will decline to write the business for a client using their home in this fashion. To circumvent the normal underwriting restrictions that carriers will have, the client is best to pursue other types of property insurance which allow for different types of living arrangements to be insured for.

What’s the solution for covering your home for home sharing?

The most common policy selected in this case is the Dwelling Fire product, which most property and casualty companies offer. This policy is written the understanding that the home is being used for means other than a primary residence of the homeowner. Annual, monthly, and sometimes even weekly occupancy categories are available for customers to choose from, ensuring that if a claim were to occur while a guest was residing in the home, the carrier would be more likely to cover the loss.

Depending on the location and frequency of the usage of the home, Specialty Lines insurance carriers offer policies for clients who rent their beach home, resort condo, or mountain cabin on even more infrequent occupancy basis. So long as the desire to make one’s home an investment vehicle exists, the insurance industry will find a way, and provide a policy to protect the property of those who want the proper coverage. It is advisable for those seeking to rent or lease their home to contact their local independentinsurance agent who will have a variety of options to choose from.